Quad in South Atlanta

[Tiffany C.]

I've been working on this deal since Jan. The seller is a tired landlord. 

Here are the details: 

4 units 

The property is valued at $150k (I got a brokers priced opinion)

The seller owes $102,000 and wants $10,000 to walk away from the property. Initially she wanted $150K but dropped the price once we discussed the comps. It was extremely difficult to find any comps for this property. 

Market rent with all four units rented is $2500

The monthly expenses are $1010 (this does not include the mortgage)

Her current mortgage is $1300 (PIT (it doesn't include insurance but I included insurance in the expenses) and her interest rate is 8.75% 

The property needs a roof. The bathrooms and kitchens are outdated but fully functional.

I've done subject to before so I offered to take over her mortgage in order to do repairs and get each unit up to market rent. As I mentioned previously, she wants $10,000. If I pay her $10,000 to get in the property and inform the tenants of the rent increase (1 unit is currently vacant); if any of the tenants decide to move I'll have to repair those units while also having to pay for vacant units. 

If we go out and get my own financing , say a hard money lender to eventually use the BRRRR strategy? They only finance up to 65 - 70% of ARV (165,000) which would be 107250 - 115,500 so we would have to bring $4750 at 65%ARV. Would I also have to pay a down payment in addition to that? And I would have to personally finance any repairs on my own.

If we got financing from a portfolio lender I know it's typically 75% - 80% LTV. And what is a typical down payment for a portfolio lender?

I really want this property, but if it's a bad deal I'll have to try to wholesale it or walk away. What are your suggestions? I welcome any useful feedback.  

[Michaela G.]

it doesn't look as if you would have positive cashflow...but might actually out of pocket every month. And you'll have to use your cash to fix. You can't just say that you'll wholesale because people expect a deal and this doesn't look like one. What are the 1100 expenses every month? If it's water for only 3 units then there's a leak or someone's holding a daily car wash